Multi-Asset Credit Investing: Why Now?
In today’s uncertain environment, high yield multi-asset credit strategies look compelling—especially given their strong track record through the cycle and the potential for attractive income.
Investors today are facing a much more complex and volatile investment landscape than that of recent years. From the Global Financial Crisis until very recently, the market largely was characterized by low or negative interest rates, making it difficult for investors to find attractive incoming-generating opportunities without taking on greater credit risk or extending interest rate exposure. Today, while the rate environment has indeed shifted, investors are challenged with other factors such as persistent inflation and fears of low growth or a recession.
Moreover, long-term asset allocation decisions are taken in the context of investors’ intended investment outcomes. For instance, an insurance company may be looking to balance the risk-reward opportunity with regulatory requirements on capital. Meanwhile in the U.K., higher rates—and the resulting higher discount rate that pension funds apply to their future liabilities—have left funding positions looking much healthier than in recent years. As a result, institutional asset owners are re-assessing their overall portfolio composition including their credit exposure.
Against this backdrop, we believe a multi-asset credit approach to high yield investing continues to make sense.
